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Sunday, September 23, 2012

Wal-Mart Stores (NYSE:WMT) Plans To Open Indian Store In 12-18 Months

Wal-Mart Stores,
Inc.(NYSE:WMT) is planning to open retail outlets in India over the next 12-18
months. The company declared this on Friday, making it the first multinational
firm to jump on the decision made by the government top open the country’s huge
retail market to foreign competitors.

The managing director
of Bharti Wal Mart, a joint undertaking operating 17 outlets that cater to
small businesses in India, Raj Jain, confirmed through an email that Wal Mart
is planning to open stores that would serve customers over the next 18 months. He,
however, refused to disclose the number of stores.

Last week, India had
announced that it would let foreign companies to take a majority wager in
multi-brand stores for the first time. The decision came as a surprise to a
number of investors. At the same time, it cost the ruling Congress Party a crucial
coalition ally.

Rivals say that the
venture will cost Indian jobs and decimate millions of shops. Advocates feel
that welcoming players like Wal Mart is vital to attract the investment required
to modernize Indian food supply chains, reduce wastes and topple food costs.

A partner in the retail
practice of management consulting company, A.T. Kearney, Michael Moriarty said
that since India lacks retail infrastructure like warehouses and cold storage
areas, Wal Mart can bring its own systems.

The new regulations command
that foreign retailers use half their investment on building supply chain
infrastructure and source 30% of manufactured goods from local medium and small
sized firms. Foreign retailers are restricted to 53 cities in India with
populations more than 1 million.

Each state will have
the right to decide whether to allow the retailers to operate from their
territory. Out of 35 states and territories that are controlled by the ruling
Congress Party, only 10 are likely to welcome foreign retailers initially, as
per David Sloan, an analyst at Eurasia Group.